The Big Three of the American auto industry (GM, Ford, Chrysler) are in big, big trouble; so much so that it is quite possible next year will see all three shutting the doors and calling it a day.  The impact of this would reverberate throughout the whole of the American economy, jobs and tax revenue lost making an already bleak environment even worse.  Devastatingly worse.

The Democrats in Congress are pushing hard for an immediate $25 billion injection of funds into the involved companies in hopes this will enable them to remain solvent long enough to at least try to solve their problems.  Although attempting to avoid the aforementioned economic meltdown is the fundamental reason for the initiative, it is impossible to not suspect some part of this proposed largess at taxpayer’s expense stems from the cozy relationship the party has long enjoyed with unions, in this case UAW.  Given how the union has flatly rejected any suggestion that wage and/or benefits concession on their part be incorporated into the manufacturer’s attempting to survive with nary a peep of protest from the donkeys, one has to wonder whether politics is trumping reality.

At the time of their formation, unions in America were a necessary counter to the far too often subhuman wage and work conditions that permeated American industry.  However, as the business practices they were created to combat were gradually prohibited by law the unions remained as they were, seeking maximum compensation for minimum participation in terms of considering themselves partners with management in striving to make their employers succeed.  The end result has been domestically manufactured products becoming scarcer than people wearing Obama t-shirts at an Ann Coulter book signing.  The dramatically lower cost of labor overseas makes it far, far less expensive to manufacture most anything and everything there to be shipped here even with the rise in recent years of fuel costs.  Although in a consumer-based economy such as ours it falls under “gee well duh” that consumers with sufficient income to purchase items at a level above life maintenance items (food, clothing and shelter) is a good thing, if in the course of doing so said consumers in their role as wage earners incur such high labor costs that the resulting price for goods they produce exceeds the affordability level of other consumers there’s not going to be a whole lot of consuming going on.  Which means reduced demand for the goods.  Which leads to the aforementioned wage earners’ employers being severely impacted if not altogether being but out of business.  Which will have direct repercussions on their employees in the form of jobs being lost.  Which leads to even less consuming.  Which leads to an economic death spiral.

It’s not that the companies are blameless in all this.  They are anything but.  Management has compensated itself in grand style, and in engineering they are perpetually outflanked by companies such as Honda and Toyota which have established a well-grounded reputation for building transportation that is both reliable and fuel efficient.  The Toyota Prius has been successfully positioned as the iPod of hybrids.  Are there others?  Yes.  But in the same fashion as when you mention MP3 players the iPod is what immediately comes to mind, the Prius is the car thought of first and foremost whenever hybrids enter the conversation.

Despite the dire straits they now find themselves in, both the labor and management elements of the American auto industry are lumbering about like dinosaurs unaware they’re about to become extinct.  Both need to embrace a radical shift in their core operational philosophy, then put that shift into action by accepting wage and benefits concessions for the sake of survival along with devoting themselves to building the best cars and (no pun intended) driving the message home that they are in fact doing this.  If these things don’t happen, even if the current bailout proposal goes through the only thing it will accomplish is temporary perpetuation of an industry unwilling to leave its home in the paleontology department.